Supreme Court puts Biden’s latest loan repayment plan on hold amid legal challenges

The Supreme Court on Wednesday put the Biden administration’s new multibillion-dollar plan to cut payments for millions of borrowers on hold, pending ongoing lower court challenges.

The justices rejected an administration motion to partially reinstate the plan. The U.S. Court of Appeals for the 8th Circuit had already blocked it. In an unsigned order, the court said it expected the appeals court to quickly issue a full verdict on the plan. The Education Department aims to speed up loan forgiveness and reduce monthly payments based on income from 10% to 5% of a borrower’s discretionary income. The plan would also exempt borrowers earning less than 225% of the federal poverty level ($32,800 a year for a single person) from making any payments.

Last year, the Supreme Court’s conservative majority rejected an earlier initiative that sought to eliminate more than $400 billion in student loan debt. The new SAVE plan is estimated to cost between $276 billion, according to the Congressional Budget Office, and $475 billion over 10 years, according to estimates from Republican-led states that are challenging it.

Two separate lawsuits against the SAVE plan are currently pending in federal courts. Decisions by judges in Kansas and Missouri have blocked significant portions of the plan. However, previously forgiven debts remain unaffected.

The U.S. Court of Appeals for the 10th Circuit allowed the department to keep a provision that called for lower monthly payments. Despite appeals from Republican-led states to overturn that decision, the Supreme Court did not see the need to intervene after the 8th Circuit blocked the entire plan. The Justice Department had proposed that the Supreme Court wade into the legal dispute over the new plan, as it had with the debt forgiveness plan, but the justices declined.

(With contributions from agencies.)